China - Foreign Exchange ControlsChina - Foreign Exchange
China maintains a "closed" capital account, meaning companies, banks, and individuals can't move money in or out of the country except in accordance with strict rules.
The People’s Bank of China (PBOC) and State Administration of Foreign Exchange (SAFE) regulate the flow of foreign exchange in and out of the country, and set exchange rates through a "managed float" system.
Starting from October 1, 2008, companies must report any overseas payment with a payment term over 90 days from the date shown on the import declaration form to SAFE —no matter the amount—or they will not be allowed to arrange the overseas payment. The accumulated reported overpayment amount in one calendar year can’t exceed 10 percent of total importation amount of the last year.
On October 30, 2008, SAFE published a notice stipulating that when an enterprise enters into a contract that contains a clause for the pre-payment for purchases, the enterprise must register (with SAFE) within 15 working days after the contract is signed. The enterprise also must register the foreign exchange repayment within 15 days before the remittance. If the contract does not contain a pre-payment clause but a foreign exchange repayment is nevertheless required, the enterprise must register the contract and the foreign exchange prepayment within 15 working days before the remittance. As to the amount of the pre-payment, in principle, the enterprise pre-payment quota cannot exceed 10 percent of the total payment the enterprise has made for importation in the past 12 months. However, enterprises handling large, complete sets of equipment are exempt.
On December 30, 2016, China People’s Bank of China issued Measures for the Administration of Financial Institutions' Reporting of High-Value Transactions and Suspicious Transactions, the goal is meant to target money laundering, terrorism financing and fake outbound investment transactions, and not normal, legitimate business activities. Under the new rules, From July 1, 2017, banks and other financial institutions in China will have to report all domestic and overseas cash transactions of more than 50,000 yuan, compared with 200,000 yuan previously. Banks will also need to report any overseas transfers by individuals of $10,000 or more. In addition, all banks must report to central government on every single foreign exchange transaction of at least $5 million. SAFE will supervise and halt any on-going ODI projects in which Chinese investors still need to transfer more than $50 million out of the country. Only once they have vetted the authenticity and legality of the company's ODI plans will the green light be given.
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